Monday, November 2, 2009

Roundtable on stimulus effects

Here's another article containing several perspectives on whether the fiscal stimulus plan is functioning. To elaborate on one of Simon Johnson's points, the U.S. has automatic fiscal stabilizers in place --- taxes fall with the economy, and some spending rises --- but typically only at the federal rather than state and local level. I wonder how much bang-for-the-buck from stimulus spending has come from "saving" educational jobs and spending programs. It would seem that's one of the most vulnerable elements during downturns, given states' balanced budget amendments.

Many are talking about the tenuousness of consumer demand, given that Cash for Clunkers appears to have shifted demand in addition possibly to increasing it above what it would have been. This is based on Friday's personal income release.